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This occurs when you experience big market losses early in retirement, which can dramatically increase the chances of outliving your savings, even if the market recovers later.

What to Know: A recent study found that retirees who invested entirely in stocks and withdrew at a steady rate had a 70 percent failure rate if they suffered losses in the first five years. In contrast, those who made it through their first five years with gains had only a one in 25 chance of running out of money. So, what can you do to protect yourself? Diversify. Adding bonds to your portfolio helps absorb market shocks, reducing the risk of early losses that can jeopardize your long-term financial security.

Key Takeaways: Your retirement success isn’t just about how much you save—it’s also about how you manage risk in those critical first few years. Planning wisely (and with a trusted financial professional) can mean the difference between a retirement filled with financial confidence or financial worry.